BUSINESS MAVERICK: The run-up to elections thwarts Africa’s M&A activity and South Africa is not spared

Historically, general elections are a source of angst for the investment and business community around the world.

The business and investment community in South Africa and Africa as a whole is no different, if the latest figures by financial data provider Refinitiv are anything to go by. Industry players said political and economic uncertainty are the main reasons for the rapid decline in investment banking fees. You don’t have to look far for seismic events that spur uncertainty: the UK’s on-going and confusing Brexit negotiations, US President Donald Trump taking a more protectionist stance on global trade, South Africa’s own political madness – just to mention a few.

Neuville expects that data for the second quarter to be subdued – a period in which South Africa, Benin, Madagascar, and Malawi would have held elections. “We could see companies not making big investments until the elections are completed.” According to Refinitiv’s figures, the value of announced M&A transactions with any sub-Saharan African involvement reached $8.8 billion during the first quarter of 2019, up 41% from the same period last year. This was thanks to the conclusion of Naspers’ spinoff of its pay-TV business MultiChoice on to the JSE.

He said South Africa has always been viewed as a complex country by foreign investors, but recent political and policy events have upped the ante on its risk. Talks to expropriate land without compensation, systemic corruption in the public and private sector, the deterioration of public finances, an economy that is stubbornly stuck at a less than 2% annual rate, and the insolvency of state-owned enterprises are some of the issues rattling investors.

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